KKR, Rhone Sweeten Takeover Proposal for Treasury Wine

Australian winemaker Treasury Wine Estates said it would enter talks to be bought by Kohlberg Kravis Roberts & Co. and Rhone Capital.

NEW YORK (The Deal) -- Australian winemaker Treasury Wine Estates Ltd. said it would enter talks to be bought by Kohlberg Kravis Roberts & Co. and Rhone Capital LLC after the financial investors sweetened a previously rejected offer to A$3.4 billion ($3.2 billion) from A$3.05 billion.

KKR and Rhone on Monday offered to buy Treasury Wine for A$5.20 per share, a 5.1% bonus to the stock's Friday close and 40.9% above its close on April 15 when KKR and Rhone first approached the target.

"The board of Treasury Wine, together with its advisers, has concluded, based on the revised proposal, that it is in the interests of its shareholders to engage further with KKR and Rhone," the company said in a regulatory filling. "The board of Treasury Wine notes that there is no certainty that the proposed transaction will result in an offer for the company."

The two financial investors in April made a non-binding offer for Treasury but the target said the bid undervalued the world's No. 2 winemaker. The April approach surfaced just a week after new Treasury Wine CEO Michael Clarke told analysts he was instigating a strategic review to get the company back on track.

The CEO is working to cut A$35 million in annual costs but has warned the move may lead to further writedowns -- it had to write off A$160 million at its faltering packaging and U.S. operations.

Monday's announcement buoyed Treasury shares, which had already gained on takeover speculation. The stock closed Monday $A$0.20, or 4%, higher at A$5.15, near the offer price.